February 18, 2005

Sweet, Sweet Unity!

Perhaps I'm not paraphrasing Nathan Newman correctly, but insofar as he's pointing out that there's really not a huge divide between liberal groups on trade issues, he's more or less right on. There simply aren't hordes of protectionist Democrats out there wanting to blockade our ports and revive the Hawley-Smoot Act. Sorry, no. As far as I can tell, the biggest fear among free traders is simply that when activists or labor unions call for higher labor standards 'round the globe, they're "really" asking for protectionism in disguise.

This is silly. It's especially silly to think that labor unions want to sneak in protectionism under the guise of "fair trade". Why would they do that? Organized labor largely works in relatively high-skilled export industries, rather than low-wage import industries, so in the aggregate they have more to gain from open trade than they do from protectionism. When labor groups think they really could benefit from a few tariffs here and there, they usually just come out and say so, as the steelworkers did in 2002 or textile unions are doing now. In fact, Newman's right in that there's a good deal more disingenuousness on the part of the free trade crowd, who pay lip service to easing the dislocation that comes with free trade, but then stay mum when President Bush actually starts gutting programs like the Trade Adjustment Assistance. That's no way to build trust.

Is there a third way in all this? Sure. You could believe, as I do, that trade really just doesn't matter all that much. Developing countries can have high labor standards or low labor standards, and thanks to the magic of free-floating exchange rates, neither option produces either economic collapse or a "race to the bottom". Let countries choose for themselves, it's not that big a deal. Now if we truly wanted to harness globalization to improve the lot of developing nations, let's look at things that actually do have a huge effect, like technology transfers or capital flows. It shouldn't be so hard to come up with a good Democratic consensus on this stuff ("Who among us does not love capital controls?"). Of course, then there's immigration, which perhaps has the biggest effect of all. That's a hornet's nest, for sure, but it's probably more divisive for Republicans than Democrats.